French jobless rate hits five-year high

25th February 2005, Comments 0 comments

PARIS, Feb 25 (AFP) - The French jobless rate jumped to its highest level in five years in January, when 10 percent of the workforce was unemployed, and economists foresee little chance for a marked improvement this year.

PARIS, Feb 25 (AFP) - The French jobless rate jumped to its highest level in five years in January, when 10 percent of the workforce was unemployed, and economists foresee little chance for a marked improvement this year.

A report Friday by the national statistics institute INSEE said the last time France was saddled with double-digit joblessness was February 2000. The unemployment rate was 9.9 percent in December.

In another dose of bad news for French planners, INSEE reported that business confidence slipped in February by one point to an indexed 104, reflecting "an economy that lacks dynamism."

The dreary job report nonetheless came despite recent signs of life in the French economy, which broke a two-year pattern of sluggish activity last year with growth of 2.4 percent.

And in the final three months of the year, gross domestic product expanded 0.8 percent, outstripping key eurozone partners Germany and Italy where fourth quarter momentum contracted.

"Whether we like it or not, the French economy is ailing," said Marc Touati, an analyst with Natexis Banques Populaires.

"Despite robust consumption, a rebound in investment late last year and the firm optimism of the government, France has been unable to slow the unemployment steamroller.

"What is worse, since growth is expected to slow in 2005, it now seems impossible that the number of jobless workers will fall below 10 percent this year, as promised by our leaders."

Prime Minister Jean-Pierre Raffarin pledged in January to reduce unemployment "by around a percentage point" per year beginning this year, which would mean lowering it to nine percent by the end of December.

Raffarin and his government are already grappling with heightened social tension, with unions calling for strikes and demonstrations March 10 to press demands for jobs, maintaining the 35-hour week and better pay.

At the bank CCF Jan-Eric Fillieule said the latest employment figures show that despite a pickup in fourth quarter growth "employers are reluctant to hire as long as prospects are uncertain and the risk of a slowdown exist."

He said the French labour market was plagued by a structural problem in that only 30.2 percent of workers under the age of 25 and 41.7 percent of those over 55 are employed or in training, well below the average for other leading industrialised countries, 50.4 and 52 percent respectively.

For Laure Maillard at IXIS Corporate and Investment Bank, France's economic malaise stems from its lacklustre export performance.

"Foreign orders suggest that the high level of the euro will continue to weigh on exports in the months ahead," he said, a weakness likely to be exacerbated by tepid growth in the eurozone, which absorbs more than half of French exports.

Commenting on the slide in business confidence this month, Stephane Deo of UBS said that "what is particularly disturbing is the component measuring prospects has again declined."

"That suggests there is little likelihood for a rebound in confidence."

© AFP

Subject: French News

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